What is MRP?
Before defining Material Requirements Planning (MRP), let’s clarify the following: MRP is only a part of an ERP software, and it is designed to plan manufacturing production. The main function of MRP is identify what is needed, how much is needed, and when it is needed so companies can meet production schedule and manage delivery timing.
MRP compares in-stock quantities, against supply and demand to make recommendations on when finished goods should be made, and components should be bought.
To better explain MRP, we can reference another module within SAP Business One called “Available to Promise”.
If you’re not familiar with what Available to Promise is, let’s review this simple formula:
Available to Promise = In-Stock + Ordered – Committed.
Let’s break each part of the equation down:
- In-Stock is your quantity on hand for all warehouses you have defined in SAP Business One
- Ordered is the quantity on open production or purchase orders – Items you are expecting to be in stock
- Committed refers to the quantity allocated to open Sales Orders, Production Orders, or Inventory Transfer Requests.
Who needs an MRP system?
Short answer is, companies of all sizes in different industries need an MRP system to be able to meet customer demands, control inventories, manage entire supply chains, reduce costs, respond to market changes, and improve overall productivity.
Is MRP exclusive for Manufacturing companies? In the MRP sense, a manufacturer is any organization that obtains components or materials and transforms them in a different item that can be sold to customers, like warehouses that package products or assemble collections of items into “kits”. Read more about what other businesses are included in this MRP blog from SAP.
MRP in SAP Business One for Small and Growing Businesses.
How does MRP work?
Increase your speed of production, offer a wider variety of products, and shave costs by more accurately estimating material requirements. Learn how does MRP works in SAP Business One in this 45-minute video.
Conclusion:
- MRP in SAP Business One does two things great – It doesn’t forget, and it doesn’t forget!
- MRP can only be as good as the information provided in the system.
- MRP offers more, real time, inclusive view to your inventory!
- MRP only provides recommendations
- MRP should be used by everyone!
- MRP promotes a Lean Processes by streamlining and eliminating waste in your organization’s Inventory and Procurement Process!
MRP is a vital decision-support system. Reach to Consensus International if you want to learn more.
Consensus International is an SAP Gold Partner that sells, implements, trains, and supports its customers on SAP Business One from its offices in Florida, Texas and Massachusetts.
If you are evaluating SAP Business One, get in touch with us.
